Now that the calendar has switched to December, it’s officially *ahem “🎶 the most won-der-ful time of the year 🎶”…but don’t tell that to your budget.
A recent Gallop poll estimates that the average American plans to spend approximately $885 on gifts this holiday season. Couple that with the costs associated with decorating, baking, and holiday parties, and it’s easy to see how holiday spending can put a dent in your budget very quickly.
For many families, excessive spending during the holidays creates financial strife for the first few months of the new year, if not longer.
But with a proper plan, that doesn’t have to be the norm.
Here are a few tips to help you survive the season without the stress that accompanies loads of holiday debt.
Create a Budget
Stop me if you’ve heard this one before…a financial advisor suggests that you create a budget to control spending.
In all seriousness, even if you despise the dreaded ‘b-word’ there’s no disputing the power of a plan that tells your money where to go.
This is especially true given the constant pressure to spend during the holidays.
When done properly, a budget allows you to put presents under the tree without breaking the bank.
Now, that doesn’t mean you just throw a number out there and plan your spending around that.
Instead, it’s important that you make a list (and check it twice…or more).
In order to get a realistic idea of how much the holidays will cost, you need to start with a list of each person that you intend to buy a gift for.
Of course, your spouse and kids are a given but don’t forget to consider extended family, friends, co-workers, your kid’s teachers and anyone else you expect to buy gifts for.
Next, write down approximately how much you intend to spend on each person.
This doesn’t have to be an exact dollar amount for each person, as long as you stick to the total amount you plan to spend on all gifts.
Now, let’s move on to other expenses.
Hosting a Christmas party? Write it in the budget. Traveling for the holidays? Add it. Planning to donate to families in need? Make sure that makes the budget too.
Simply put, every holiday-related expense that you anticipate should be accounted for in your budget!
Set the Expectation for Family and Friends
Armed with a solid budget that outlines what you’re spending and where, now it’s time to set expectations for your family and friends so that everyone is on the same page.
There’s no shame in telling others that you won’t be spending as much on Christmas this year.
In fact, chances are many of your family and friends are likely experiencing the same financial dilemmas you are and will be relieved that you initiated the conversation.
Track Your Spending
During the holidays, you’re likely spending more than usual, which makes tracking your spending arguably more important than any other time of the year.
When you consider all the events and gift-giving, it’s not uncommon to spend more than intended.
The key is maintaining a pulse on your spending. By tracking what you spend you will always know where you stand regarding your budget. In fact, you should aim to reconcile your expenses to your budget at least once per week during the holidays.
Stay in the Black throughout the Holidays
How you manage your spending during the holiday season will determine whether you’ll start the new year off strong or nursing a holiday hangover.
While staying disciplined during the holidays isn’t always easy, it’s possible and I have no doubt you can do it. Just remember what you’re working toward, be honest about what you can (and cannot) afford, and don’t give in to the pressure of spending just because it’s an expectation of the season.